Dye & Durham Strengthens Balance Sheet with Debt Refinancing

By Robb M. Stewart

Dye & Durham, the Canadian legal-practice management software company, announced its plan to strengthen its balance sheet and reduce convertible debt. As a result, the company saw a sharp decline in its shares, which were 7.5% lower at C$10.93 in Friday afternoon trading.

The company confirmed that its financial performance in the first quarter of this fiscal year met expectations. Dye & Durham revealed that it is refinancing a significant portion of its convertible debt on favorable terms, with the aim of reducing the balance of original convertible debentures by 95 million Canadian dollars ($69 million), thus decreasing overall convertible debt by C$10 million.

This strategic move is expected to provide the company with greater flexibility to refinance and strengthen its balance sheet in the future, according to Chief Executive Matthew Proud.

As part of the debt refinancing process, Dye & Durham is offering to cancel up to C$95 million of its 3.75% convertible unsecured debentures due March 1, 2026, in exchange for approximately C$32.3 million in cash. The debt will be retired at C$750 for every C$1,000 principal amount.

To support the cash payable under the offer, the company will also issue C$20.4 million of new debentures. Additionally, Canaccord Genuity will have the option to purchase up to C$5 million in new debentures to cover any overallotments. The new debentures will carry an interest rate of 6.50% per year, payable semi-annually, and can be converted at any time at a rate of C$40 per share.